Study Group: Post-Brexit Relations with Russia & China

This article was originally written for the Stourbridge Labour Party Study Group, which meets monthly to discuss national and international policy issues. Much attention is paid to our future relationships with the EU and the USA after Brexit, but Russia and China – two other great powers – are largely ignored, hence this essay. Our member T. W. Pee presented the original paper to the meeting in March; this is the amended version, with some changes made following the group discussion. It closes with some ideas and policies that the Labour Party (in opposition or in government) could pursue in relation to the issue.

Tipping the Balance: Dealing with Russia and China in a post-Brexit WorldBy T. W. Pee

It is now apparent that the UK will formally leave the European Union within the next 2 years. Although it is unclear how exactly this process will end, we will likely find ourselves outside the single market. The government then will have to establish new trade links and agreements to replace the business lost.

Prime Minister May has already made some overtures in this regard, holding discussions with Turkey’s President Erdogan and the USA’s President Donald Trump – whom she controversially invited to a full state visit just a week into his Administration. May has also participated in meetings with Commonwealth allies India and New Zealand among others, although I will not examine those in this article.

We must first accept that the balance of global power has changed. The UK can no longer rely on the international influence of the USA as it retreats inward to focus on “America First”. The country must then reconsider its relationship with other world powers – most notably, Russia and China.

I will first explain how the UK interacts with these countries in 3 spheres of influence (inside their own borders, in foreign interventions and in the heart of the West) and offer some recommendations for the future.

Similarities Between Russia and China

First we must understand that while Russia and China approach issues differently, there are similarities in their national history and make-up that allow us to see them as a connected phenomenon. These are listed below:

Both populations have experienced state-sponsored mass killing in the recent past; in China, the neighbor-on-neighbour brutality of the Cultural Revolution; in Russia, a succession of purges against political and ethnic groups opposed by the state.

Both are essentially One Party states.

Both states have adapted to trade in the global capitalist economy without fully embracing this model at home.

Both are formerly Communist countries (although the Communist Party still holds power in China, it has changed much since the Cold War).

Russia and China can be considered as two sides of the same coin; they are a challenge to the hegemony of Western liberal democracies such as the USA and Europe, and have rejected those models of government in favour of a more authoritarian system.

The UK and the West in Russia and China

Although official diplomatic policy towards Russia and China has varied over the past few decades, the UK has maintained a trade presence inside their territories throughout periods of diplomatic difficulty.

Although popular history is dominated by the perception that Nixon’s visit to Chairman Mao opened Chinese-Western relations, Britain’s former imperial ties mean we never left. In China, the UK maintained banking and trade relationships with the People’s Republic of China from the socialist revolution of 1949 and throughout the Cold War.

This was done through the (much diminished) branch infrastructure of HSBC and through links between the mainland and Hong Kong, which at that point was still a Crown Colony. The UK was also the first “Western” country to recognize the PRC government, although formal diplomatic relations weren’t established with China until 1972.

Relations with Russia during this period were considerably cooler, and UK businesses only began entering the country again after the end of the Cold War. The swift introduction of capitalism and the free market in the 1990s was and continues to be viewed as a period of anarchy by the Russian public:

This contributed to a general hostility to what’s seen as “foreign interference” in Russia. After Putin came to power, foreign businesses inside the country faced the challenges of both tighter regulation and government corruption.

Both countries operate protectionist policies. In China, for instance, it is hard for foreign businesses having goods manufactured there to defend Intellectual Property in court against a Chinese plaintiff. Regardless of these challenges, China remains the “manufacturing powerhouse” of many Western businesses.

The situation in Russia is difficult both economically and diplomatically due to the sanctions that have been in place since the invasion of Ukraine. Russia also operates its own sanctions against imports and visiting diplomats from the EU.

Implications

Should we wish to pursue a trading relationship with Russia, the lifting of sanctions by the UK may be used as a bargaining chip. More likely, this would actually be imposed as a condition by Russia in any deals that take place.

China does not present the same opportunity. However, the EU has not established a Free Trade Agreement with China as it does not recognize China as a free economy. This may allow the UK to push for “Most Favoured Nation” status with regard to China.

Foreign Intervention

Both states exercise power and influence through foreign intervention, although their approaches are substantially different. Close to their own borders, Russia and China attempt to maintain historical territory – for Russia, the borders of the former USSR and for China, the Qing dynasty borders before it fell in 1911 (of which Tibet was a protectorate).

Russia pursues a policy of direct intervention that often brings it into conflict with the foreign policy interests of the West (and the UK by extension). Recent examples include Ukraine, where Russia launched an unofficial armed intervention in the wake of the recent Revolution to halt the country’s move towards European influence. Russia is also building up its forces along its borders with the Baltic States – where NATO are responding in kind.

Russian foreign policy close to the border is focused on maintaining a “buffer zone” of former Soviet countries such as Ukraine, Georgia and Kazakhstan against external influence. China practices a similar policy with respect to North Korea, which acts as a barrier against American projection of power from the South.

Further afield, Russia’s involvement in Syria acts as another defence of its own interests but also has propaganda value; Russia is now able to market itself as a powerful actor in the “War on Terror” and diminish the military power of the USA and its allies in the region – the UK being one of these. It also serves as a political challenge to the export of Western democracy in the region.

Chinese projection of power is less overt. Outside of military displays in the disputed islands of the South China Sea, it takes the form of economic “soft power” in Africa. This approach has long been a feature in Chinese policy, as in its ancient period:

“Rulers and ministers preferred to believe in the myth of cultural attraction whereby their vastly superior Chinese civilization, founded on Virtue and reinforced by opulent material achievements, would simply overwhelm the hostile tendencies of the uncultured…
If they could not be overawed into submission or bribed into compliance, other mounted nomadic tribes could be employed against the troublemakers, following the time-honoured tradition of ‘using barbarian against barbarian.’” – Sawyer, R. (1994)

Unlike the UK or the USA, Chinese investment does not come with political conditions attached. Notable Chinese projects include the African Union’s headquarters in Addis Ababa, substantial highway and rail links and special economic zones based on the Shenzhen model. Chinese brands such as Huawei also enjoy ubiquity in various markets on the African continent.

Implications

In any future negotiations, these states may ask the UK to support (or at least remain silent over) internationally controversial foreign policy actions such as Ukraine, Syria and the South China Sea in exchange for favourable trading conditions for the UK. Russia in particular may request that we either exert influence within NATO in their favour or simply leave, further weakening the alliance.

Within the UK and the West

Russia and China also promote their own interests in Western liberal democracies, although again their approaches differ quite substantially.

Russia pursues political influence in Europe and the US. Most famous are the recent allegations of cyber-warfare and Russian financial influence surrounding US president Donald Trump, although the EU itself heavily suspects Russian state involvement in the Brexit campaign and the forthcoming German elections through the funding of far-right anti-immigration Parties and the creation and distribution of “fake news”.

For Russia, the benefits of this include:

The election of an administration more favourable to Russian interests.

Political disruption of Russia’s main opponents, allowing Putin to pursue his own objectives while the West is distracted.

An opportunity to discredit liberal democracy as farcical, allowing Putin to cement power and discourage reformers at home.

China does not follow such a direct path, but has managed to exercise some soft power in the UK. Chinese investment has risen substantially since 2012, and Chinese interests now own a diverse range of businesses; MG Rover (owned by Shanghai Automotive), substantial stakes in Weetabix (Bright Food), Superdrug (A. S. Watson) and numerous football teams.

Chinese and French interests are also behind the Hinckley Point power plant, and the Chinese government is also set to develop two more powers stations at Sizewell and Bradwell. Chinese investment in infrastructure is projected to grow to £100 billion by 2025.

China’s dumping of cheap steel was cited as a primary reason behind Tata’s proposed closure of the Port Talbot Steelworks, leading to public unease about the nature of our business relationship with China. Ironically, the UK had previously opposed anti-dumping proposals in the EU which would have placed higher tariffs on these imports.

Culturally, attitudes to China are warmer than those towards Russia. This was facilitated by the spectacle of the 2008 Beijing Olympics and subsequent glut of travel documentaries portraying a generally positive image of modern China and its people. The same cannot be said of Putin’s Russia, which is more often the subject of exposés.

Chinese production companies are also trying to enter the Western box office, a recent example being The Great Wall. American productions are also now turning to investment from Chinese production companies – who usually demand that a token Chinese actor or actress be given a role (see Kong: Skull Island and Independence Day Resurgence for the most egregious examples). In comparison, Russian productions have an almost non-existent presence on UK screens (aside from news channel Russia Today).

Implications

In the event of trade negotiations, Russia is likely to demand access to its financial assets in London, while China may put forward conditions that allow it to flood the market with cheaper resources and products.

Conclusions

As US influence declines and Britain withdraws from the EU, it will be increasingly necessary to establish a more favourable relationship with Russia and China. This will come with the expense of ignoring deficiencies on human rights and political freedom within those states.

Such a partnership also has the potential to erode UK industries and/or our political establishment if not managed effectively. It may also have the effect of alienating the UK from its current political allies.

A future government would have to weigh the consequences such a deal would have for Britain’s workforce. Any such FTA with China or Russia presents a substantial risk of dumping, takeovers or outsourcing which could leave many workers out of work or employed under contracts with reduced rights. The freedom of Trade unions would also be under threat, as such organisations would be seen as obstacles in this environment of deregulation.

Were such deals to be undertaken by a Conservative government, a Labour opposition could pursue this angle, along with emphasising the moral compromises being made and the damages this would do to the UK’s international reputation.

Recommendations

Actions that may avoid or mitigate the negative effects of a new UK-Russia or UK-China trading relationship are as follows: